Square’s Bitcoin Transactions Bolster Third Quarter Gross Profits


Initial Reports Mostly Positive

San Francisco-based payment company Square reported a jump of just under 60 percent for its third quarter profits November 4, reflecting a gross profit of $1.13 billion and a year over year increase of 39 percent. Much of the increase was attributed to bitcoin (BTC) transactions on Cash App, the company’s peer to peer, mobile payment service. Cash App users reportedly processed $3.7 billion in transactions in Q3, up 27 percent due in part to the pandemic, which has led many buyers to turn to e-commerce solutions for their purchases. BTC revenue increased 11 percent from the previous year generating $1.82 billion and $42 million in gross profits.

A Couple of Caveats

Despite the positive report, bitcoin revenue for the payment company has nevertheless slowed substantially since the start of the year. At its peak in Q1, the company reported BTC revenue of $3.51 billion and $2.72 billion in Q2.

These latest figures show a 33 percent decrease in BTC revenue since Q2 and, according to Square’s letter to its investors, the dip can be attributed to the increasing stabilization of the leading cryptocurrency’s prices which impacted trading. In addition, the 39 percent year over year increase over 2020’s third quarter may be more a reflection of the deep economical freeze the country was in at the time due to the pandemic.

An Undeterred CEO

While cryptocurrencies in general have a reputation for volatility, Square CEO and founder Jack Dorsey hasn’t let that deter him from investing in bitcoin. In October 2020 Square added $50 million in the leading cryptocurrency to its balance sheet and another $170 million in February of this year. As per Square’s Q3 report, the fair value of the company’s BTC investment stood at $352 million on September 30.

The billionaire entrepreneur and co-founder of Twitter has also been working on developing an integrative BTC wallet, an open platform for BTC financial services and possible mining hardware.

In other news, the firm is also in the process of acquiring buy now, pay later firm Afterpay for $29 billion.

Q3 adjusted earnings per share matched analyst predictions at $0.37. The Q4 earnings report is expected to come out on February 22, 2022.

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